Helping retailers prepare for the 2020 holiday season
Vice President, Industries, Google Cloud
Although summer is a time when many of us are thinking about sunshine and weekend trips to the beach, for retailers, summer means preparation for the holiday season, the most important sales period of the year. The typical holiday season presents retailers with familiar challenges: increased product demand, planning in-store seasonal staffing, supply chain pressures, and spikes in web traffic—to name a few.
But 2020 is going to be different.
The long-tail impacts of the COVID-19 pandemic will continue to be felt in the retail industry through this year and into the next. Many retailers have been forced to reduce their physical footprints or change the way they operate, in addition to exploring new ways of delivering their products into the hands of customers, with more changes likely to come. Several major U.S. retailers have already announced being closed for Thanksgiving, further changing the digital and physical dynamics of the season. So how will this year’s holiday season play out?
Connecting people with information is what Google does best
We know the months ahead are paved with uncertainty, from fluctuating physical distancing restrictions, to questions on the strength of consumer spending given the pandemic, to the emergence of new consumer channels and buying paradigms. Retailers can prepare by understanding how shopper behaviors have changed, and by following the latest Google Cloud guidance in our ebook, “A retailer’s guide to 2020 holiday season readiness: Five keys to success.”
Shape your strategy by understanding consumer behavior
Looking ahead to the 2020 holiday season, third-party market trends and our Google-led research indicates three overarching consumer behaviors that have the power to affect how retailers perform. As your team prepares in the months ahead, keep in mind these changes to purchasing habits, loyalty, and sentiment.
1. More consumers are shopping online for the first time, and for products they would normally buy in-store.
Perhaps unsurprisingly, the shift to ecommerce accelerated at its fastest ever rate in 2020. By May, it was up 70% year-over-year and had reached $82.5 billion in the United States. This shift affected retail segments that had previously lagged behind the shift online, like grocery. In the first week of March, only 11% of US adults said they shopped online for groceries. By the end of the month, that figure had jumped to 37%.
We saw the abandonment of long-established buying habits as home-bound customers began to experiment with new approaches to purchasing everyday items. In addition to the steep rise in online grocery shopping, 1 in 4 of surveyed shoppers went online during the lockdown to purchase something they would normally buy in-store.1
While stores are now reopening in many regions, new limits on physical interactions, reluctance on the part of consumers to shop in-store due to fears around COVID-19 exposure, and the possibility of further store closures (due to future waves of the virus) mean that a question mark continues to hang over the viability of a predominantly bricks-and-mortar retail strategy.
Having a flexible and scalable ecommerce channel is becoming table stakes as more consumers are willing to go online to find and purchase a wider variety of products. Retailers looking to prioritize their holiday season readiness efforts should begin by doubling down on their omnichannel strategy.
2. Shoppers expect new contactless ways to make every type of purchase.
Before the pandemic, many shoppers found a visit to a store to be the fastest and simplest way to get what they needed. That changed when lockdown and shelter-in-place orders were issued and 53% of shoppers reported trying a new shopping service for the first time.2
This included grocery delivery, as previously mentioned, but also checking inventory online before heading to the store, as well as trying curbside pickup. And for those who haven’t yet tried new services, the intent is there. Searches for “curbside pickup” rose 100% in March, while looking for “home delivery” grew by 70%—and more than 50% of consumers in a Google survey believe that curbside pick up will still be relevant as stores reopen.
What people are buying is also changing. Google Search data shows a drastic increase in searches for items to complement spending more time in the home. For example, ergonomic chairs to improve the home office or home improvement items to enhance the quality of living spaces.
Retailers need to understand and be able to act on emerging consumer trends to deliver new offerings and support changing buying preferences. We recommend leveraging tools like Google Trends and Rising Retail Categories to spot fast-rising retail categories, while investing in supply chain improvements to increase flexibility and resilience.
3. With consumer sentiment low, shoppers are more value-conscious than ever before.
Widespread disruption to lives and livelihoods has contributed to a drop in consumer sentiment in many markets around the world. A McKinsey study found that the vast majority of consumers in the 45 countries surveyed expect COVID-19 to impact their finances and personal routines for more than two months. In the United States, almost a third of consumers are already switching to less expensive products to save money.
Looking at the retail industry as a whole, overall forecasts have decreased by more than 10% since the beginning of the year. Retailers that are successful this holiday season will have a strong, targeted strategy for reaching consumers with the products that are most relevant to them, at the right price.
Reaching shoppers with the right message at the right time relies on having access to advanced analytics and machine learning technologies. With industry solutions from Google Cloud like the recently launched Recommendations AI, retailers can drive digital acceleration, increase consumer satisfaction and improve operational efficiency across the value chain.
Here to help you prepare for the unpredictable
This year has been one of frantic and unexpected change for many of us. We’re committed to bringing forward technologies the retail industry needs and to partner with our customers to help them face any surprises this holiday season. This is why commerce companies such as Etsy and Shopify, and retailers like The Home Depot and Urban Outfitters choose Google Cloud to support them during the busy shopping season. In particular, they leverage our Black Friday and Cyber Monday (BFCM) white-glove services, where we work side-by-side with their IT and engineering teams from early capacity planning, to reliability tests, to operational war rooms.
Our teams are here with the solutions and the expertise to help you succeed through this holiday season and into the next. Start with our practical, actionable guide to help you prepare for a successful holiday season and beyond. From tips on cloud migration for cost management, to empowering your service centers with the support of AI, we outline the areas that will make the biggest difference to the customer experience and to your bottom line. Download the ebook today and join us for one of our Retail OnAir events, where we’ll share learnings from our work with leading retailers.
1. Google/Ipsos, U.S. Shopping Tracker, March 2020
2. Google/Ipsos, Shopping Tracker, Jan, Feb, Mar, April 2020